By Brett Shadbolt on Wednesday, 22 February 2012
Category: Articles

New IP Disclosure Guidance for HKex

 

HKEx endorses wider Intellectual Property disclosure.

Can a wider disclosure of IP bring benefits to a launching business? The HK Exchange believes so. The recent guidance note from HKex in relation to Main Board Listing Rule Appendix 1 - Part a Paragraph 28(4) - and GEM Listing Rule Appendix 1 - Part a Paragraph 28(4) – encourages listing companies to disclose how IP impacts their business and its profitability.

What’s the reason behind this initiative? Generally, wise investors know that IP portfolios do not automatically translate into profits. Only companies that effectively manage and grow IP are the ones capable of generating superior returns.

The HK Exchange is then moving forward to ensure that investors are properly informed about the key assets which drive corporate profitability. While the new rules fall short of a comprehensive Intellectual Capital report, they are a useful starting point. The HKEx, by issuing such recommendations, requests listing candidates to discuss the material impact that IP has on the business performance and how much the overall business depends on those assets.

All individuals and companies dealing with Intangibles recognize them to be the main source of competitive advantage and, consequently, the central stream of profitability. However, isolating and defining the impact of IP can be challenging.

According to HKex, the materiality of IP should be assessed and judged both quantitatively and qualitatively, especially in case of different forms of IP. The disclosure should be meaningful and consider:

  1. How relevant is the IP information for investors while they make their investment decision;
  2. How deeply IP impacts the context, profitability and future of the business; and
  3. How dependent is the business on these IP assets.

This means that simply listing IP is not sufficient: a dedicated analysis is needed to earn trust from investors and approval from HKex.

As a leading IP analysis and consulting firm, Censere has always promoted the strategic role of IP and the importance of measuring, analysing and enhancing IP. Across 10 years of activity, Censere has analysed Intangibles in numerous industries and has seen first-hand that well managed IP portfolios are essential to value creation. Measuring and managing Intangibles are twin operations bringing above average profitability and investor confidence.

Censere has accumulated extensive experience over time and attracted specialised professionals that understand business challenges and can provide appropriate solutions to differing needs. From Intellectual Capital assessments, IP portfolio analysis, IP strategy development or IP commercialisation assistance, Censere is ideally placed to assist its clients to reach their objectives.

The HKex guidance note can be found here.